Every year since the Affordable Care Act went into effect, a misinterpretation of the law called the “family glitch” has erroneously closed the door to affordable health care coverage to millions of people. This summer, I testified in support of the Biden administration’s move to fix it. Just last week, the final proposed rule to “fix the glitch” was posted to the Office of Information and Regulatory Affairs — the final step before the rule can go into effect.
When the administration sought feedback on the proposed rule, nearly 3,900 comments were submitted. The overwhelming majority of comments were from individuals — who might otherwise not engage in the machinations of regulatory affairs within the executive branch — underscoring the burden that many carry, and the need for urgent action. They were joined by advocacy organizations, philanthropic foundations and health systems in calling on the IRS to correct this long-overdue misreading of the Affordable Care Act (ACA).
Now that the comment period and hearing showed us where the American people are on this issue, it’s time for swift action to ensure that dependent family members — mostly women and children — are eligible for ACA tax credits so they can finally have access to affordable health coverage, as intended by the law. The “family glitch” leads to unmanageable medical bills by barring 5.1 million people from accessing affordable health coverage. These are working families, many at the lower end of the income spectrum who, despite working full time, struggle to make ends meet.
They are people like Felicia Warden, an educator in Tennessee. She pays almost $1,200 per month to insure herself, her husband and their two young daughters through an employer-sponsored plan, which amounts to almost 25% of her income. Because of the “family glitch,” the IRS currently considers this preposterous amount “affordable” and offers no premium tax credits for Marketplace coverage to families like Felicia’s — which would lower the monthly cost of insurance as intended under the ACA.
The fact that current regulations interpret the law to separate the cost of Felicia’s coverage from her husband and her children simply doesn’t square with what Congress intended when the law passed. Felicia and her family deserve access to health care without fear of going into medical debt. And like too many families, the high cost of coverage does not even guarantee comprehensive care. Despite paying nearly a quarter of her gross income for health insurance coverage, Felicia’s plan often doesn’t cover the costs of her family’s prescribed medications and she ends up paying hundreds of dollars a month in additional out-of-pocket costs. This is exactly the issue Congress was trying to rectify when they created the health insurance marketplaces and the tax credits designed to make coverage more affordable.
But because of the IRS’s failure to interpret the statute appropriately, families have been forced to make the choice of leaving some of their loved ones, including their kids, uninsured or to struggle with high premiums and out of pocket costs. This erroneous interpretation has made these families vulnerable to the burden of medical debt which could then impact their ability to find a home, buy a car or even gain better employment. As a result of their lack of access to care, these families often end up forgoing preventive care, prenatal care, mental health treatment, cancer care and other necessary medical care because they simply can’t afford it.
Too often, the people forgoing care are Black and brown people who have been negatively affected by purposeful, longstanding and racist barriers to health and economic security, including the harmful misinterpretation of the law that led to the “family glitch.” Knowing this is true, it’s reasonable to believe that a disproportionate number of the families with low-incomes affected by the glitch are Black and brown families. The “family glitch” is worsening inequities and making it harder for all people to be healthy and thrive.
Additionally, an added sense of urgency should be felt with open enrollment set to begin in November. We have recently seen record enrollment thanks in large part to efforts by Congress and the administration to lower the cost of premiums, which has made health coverage more affordable for millions. The impact of increased premium subsidies from the American Rescue Plan Act made clear the immediate and important beneficial effects that policy can have in building healthy families. Fixing the “family glitch” is a similar measure that will have an immediate, positive impact in people’s lives.
The Biden administration must take immediate action to put health care within reach for millions of American families. With open enrollment around the corner, the time is now to finally help working families that have been shut out of coverage for far too long.